Vietnam Business Law Blog

Under the Penal Code 2015, only “commercial legal person” (pháp nhân thương mại) could be subject to criminal liability. A commercial legal person is a legal person with the main objective of “seeking profit” which is distributed to its members. However, the concept of commercial legal person may raise several issues as follows:

The Criminal Proceedings Code 2015 only refers generally to “legal person”. It is not clear why the Criminal Proceedings Code 2015 does not use the term commercial legal person despite being drafted and passed at the same time as in the Penal Code 2015.

A commercial legal person’s main objective is “seeking profit” (tìm kiếm lợi nhuận). With the exception of “social enterprise” (doanh nghiệp xã hội), an enterprise in Vietnam is established for “the purpose of doing business” (mục đích kinh doanh). And “doing business” has the purpose of “generating benefit” (sinh lợi). There is a slight difference between the use of words in the Enterprise Law 2014 and the Civil Code 2015. However, presumably, “generating benefit” under the Enterprise Law 2014 is intended to have the same meaning as “seeking profit” under the Civil Code 2015.

The Civil Code 2015 considers social enterprises to be non-commercial legal person. Under the Enterprise Law 2014, a social enterprise is set up to solve social or environment issues for public benefit. However, a social enterprise still has the objective of making profit and still distributes profit to its members as long as it retains at least 51% of its profit for its social purpose. In practice, a social enterprise can still commit the crimes which apply to other enterprises (e.g. polluting the environment or tax evasion). Therefore, in the author’s opinion, the classification of social enterprises being non-commercial legal person under the Civil Code 2015 is a mistake and social enterprises should still be subject to criminal liability under the Penal Code 2015.

Profit of a commercial legal person is distributed to its members. Under the Enterprise Law 2014, an enterprise is entitled to distribute its profit to its members. However, it is also possible for an enterprise to decide not to distribute its profit to its members. In that case, it is not clear if such an enterprise is still considered as a commercial legal person under the Civil Code 2015.

Entities which do not have legal person status or non-commercial legal persons are not subject to criminal liabilities under the Penal Code 2015. This approach is different from the approach taken in other countries which cover both legal and non-legal persons. Presumably, the draftsman of the Penal Code 2015 wanted to adopt a restrictive approach when defining corporate criminal liability since this is the first time Vietnam applies corporate criminal liability. However, this approach may not be fair to commercial legal person since many of the crimes applicable to commercial legal person can also be committed by other legal persons or non-legal persons (e.g. terrorist financing or polluting the environment). For example, in practice, if a hospital being a public service unit pollutes the environment then the hospital is not subject to criminal liability. On the other hand, if a hospital being a private company pollutes the environment then the second hospital is subject to criminal liability although in practice both hospitals collect medical fees from its patients.